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Tuesday, October 4, 2022

India Rupee Review: RBI’s persistent dollar sales keep 80/$1 at bay

Informist, Friday, Jul 15, 2022

 

By Pratiksha

NEW DELHI – The rupee averted a fall below the psychologically-crucial 80-a-dollar mark today due to continuous sales of the greenback, likely by the Reserve Bank of India, dealers said, even as foreign portfolio investors and oil marketing companies purchased the US unit persistently.

 

Today, the rupee settled at a record closing low of 79.8775 a dollar. The Indian unit restricted itself to a range of 14 paise today. 

 

The Indian currency started the day at an unprecedented low of 79.9400 a dollar as prices of crude oil rose amid uncertainty around how aggressive the US Federal Reserve might be in hiking interest rates, dealers said. At 1624 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $100.98 a barrel as against the previous close of $99.10 a bbl. Prices had fallen to $94.50 a bbl on Thursday. 

 

A rise in crude oil prices increases India’s import bill and weighs on the rupee, given that India is the third-largest oil importer in the world.

 

Fed Governor Christopher Waller said he supported another 75-basis-point interest rate hike at the central bank’s policy meeting, due later this month, but would lean towards a larger hike if new data shows demand is not slowing fast enough to reduce inflation, according to reports. St. Louis Fed President James Bullard also said he would prefer to hike interest rates by 75 bps at the central bank’s Jul 26-27 meeting, reports said. 

 

Higher-than-expected inflation in the US, in the month of June, led to concerns that the US central bank could go for a 100 bps supersized rate hike later this month.

 

Shortly after open, the Indian unit fell to a record low of 79.9525 a dollar. However, the RBI stepped in to sell the US unit around the 79.94-79.95 a dollar, which limited the losses, dealers said.

 

As the central bank stepped up its dollar sales, the rupee pared almost 10 paise of losses and moved to the 79.8400 per dollar level, dealers said.

 

“Since the RBI was there in the market since the beginning today, and that too aggressively, it was inevitable that the 80 (a dollar) level will be avoided,” a dealer with a state-owned bank said.

 

The rupee was then at 79.87-79.92 a dollar for almost two hours as losses from dollar purchases by FPIs and oil marketing companies were restricted because of persistent sales of dollars on behalf of the RBI, dealers said. 

 

Dealers said dollar purchases were by FPIs who drew out of Indian assets. So far, this year, foreign institutional investors have pulled out around $30.92 bln from the Indian equity markets.

 

Moreover, state-owned banks purchased the greenback on behalf of oil marketing companies which also weighed on the Indian unit, dealers said.

 

“The record high trade deficit number clearly added to the negativity around rupee,” a dealer with a private bank said. “The demand (of dollars)in the market is still high.”

 

Data released on Thursday showed India’s merchandise trade deficit widened to a record high of $26.18 bln in June on account of high oil imports, thus adding to the pressure on the rupee.

 

This is the second straight month in which trade deficit has touched a record high.

 

During the final 30 minutes of trade, the rupee rose to the day’s high of 79.8175 a dollar, as the central bank aggressively sold dollars around the 79.90 a dollar level, dealers said. The Indian unit ended the at 79.8775 a dollar.

 

 

AT 1530 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.877579.940079.817579.952579.8750

 

FORWARDS

Premium on dollar/rupee forwards rose today because importers booked forward contracts in anticipation that the rupee may fall further in the coming days.

 

The premium on one-year dollar/rupee contract was 243.35 paise, against 234.40 paise on Thursday. On an annualised basis, the premium was at 3.05% against the previous close of 2.93%.

 

Premiums also rose as exporters refrained from selling dollars for forward delivery.

 

OUTLOOK

On Monday, the rupee will take cues from overnight movement in the dollar index and Brent crude oil prices, dealers said.

 

“Whether the rupee will touch the 80 (a dollar) level depends entirely on how long the RBI is able to sustain these levels,” a dealer with a brokerage firm said.

 

Dealers are of the view that the RBI will continue to intervene through dollar sales to protect the rupee from depreciating sharply against the dollar.

 

Dealers have pegged immediate key technical support for the rupee at 80.00 a dollar.

 

During the day, the rupee is seen at 79.70-80.20 a dollar.

India Rupee: In narrow range; RBI persistently sells dollars

 

 

AT 1312 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.887579.940079.837579.952579.8750

 

NEW DELHI – The rupee moved in a narrow range today against the dollar as the losses from dollar purchases by foreign portfolio investors and oil marketing companies were restricted. This was because of persistent sales of dollar on behalf of the Reserve Bank of India, dealers said. 

 

State-owned banks sold dollars on behalf of the central bank, which wanted to prevent the rupee from depreciating below the psychologically-significant support level of 80.00 a dollar, said dealers.

 

The Indian currency fell to a fresh record low of 79.9525 a dollar today. 

 

For the rest of the day, the Indian unit is seen in the range of 79.7000-80.2000 a dollar.  (Pratiksha)

India Rupee: Premiums tad up on forward dlr buys by a few importers

 

 

AT 1100 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.8525   79.9400

 

 

79.8525

 

 

79.9525

 

79.8750

 

1-year dlr/rupee fwd (paise)239.85237.35240.35 237.35234.40

 

MUMBAI – Premium on dollar/rupee forwards rose slightly because some importers booked forward contracts in anticipation that the rupee may fall below 80 a dollar levels in the coming days, dealers said. 

 

The premium on one-year dollar/rupee contract was 239.85 paise, against 234.40 paise on Thursday. On an annualised basis, the premium was at 3.00% against the previous close of 2.93%.

 

Dealers added that short forward dollar bets had receded a little in the last few sessions since the Reserve Bank of India had stopped selling dollars for forward delivery following their sales of dollars in the spot market.

 

Exporters also refrained from selling dollars for forward delivery as they expect the rupee to fall further during the day. The dollar/rupee exchange rate is a component of the premia received by exporters for selling forward dollars. A rise in the dollar/rupee pushes the receivable premia up, thus encouraging exporters to book contracts at those levels.  (Srijonee Bhattacharjee)

India Rupee – Asia FX: Down as US dlr gains on global growth worries

 

MUMBAI – Major Asian currencies were down today due to broad-based strength in the US dollar amid fears of a contraction in global economic growth.

 

The dollar index, which measures the strength in the US currency against a basket of six major currencies, has been strengthening over the past few sessions on expectation of steep interest rate hikes at the US Federal Reserve’s policy meeting later this month. 

 

Data released earlier today showed that China’s economy contracted sharply in Apr-Jun as growth was hit by recurring and widespread COVID lockdowns in March and April.       

 

China’s GDP fell 2.6% in Apr-Jun from the previous quarter, while it grew 0.4% on year as against 4.8% in Jan-Mar. This dented sentiment for Asian currencies.

 

The South Korean Won was the worst affected and fell over 1%, given its close trade ties with China. (Srijonee Bhattacharjee)

India Rupee: Hits record low as crude up; RBI dlr sales limit losses

 

AT 0942 IST

AT 0900 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

79.940079.940079.870079.952579.8750

 

NEW DELHI – The rupee fell to a record low against the greenback today as prices of crude oil rose amid uncertainty around how aggressive the US Federal Reserve will be in hiking interest rates to curb mounting inflation, dealers said. 

 

Fed Governor Christopher Waller said he supported another 75-basis-point interest rate hike at the central bank’s policy meeting, due later this month, but would lean towards a larger hike if new data shows demand is not slowing fast enough to reduce inflation, according to reports. 

 

A higher-than-expected US inflation reading released on Wednesday had resulted in concerns that the US central bank could go for a 100-basis-point supersized rate hike later this month.

 

At 0942 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $100.15 a bbl as against the previous close of $99.10 a bbl. Prices had fallen to $94.50 a bbl on Thursday.

 

Meanwhile, dealers said losses in the Indian currency were restricted as some state-owned banks sold dollars, likely on behalf of the Reserve Bank of India. 

 

Dealers said the central bank wanted to prevent the rupee from falling beyond the psychologically-significant support level of 80.00 a dollar. 

 

“The RBI has been aggressive since the opening today,” a dealer with a state-owned bank said. “Whether the rupee will breach 80 (a dollar) today is entirely dependent on how much the RBI supports, since the demand (for dollars) in the market is still very high.” 

 

The Indian currency fell to a record low of 79.9525 a dollar today. 

 

Dealers have pegged the immediate technical support for the rupee at 80.00 a dollar.

 

For the rest of the day, the Indian unit is seen moving in the range of 79.7000-80.2000 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee – Jul 15

 

NEW DELHI – Following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:

 

Participants

SUPPORT

RESISTANCE

State-owned bank80.2079.80Foreign bank80.2079.65Private bank80.1279.80Private bank80.1579.80Private bank80.0579.75Brokerage firm80.0579.75

(Pratiksha and Richard Fargose)

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Aditya Sakorkar

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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